ECON201 Exam #1

C

John has to choose between a camping holiday and a holiday in Las Vegas. If he evaluates the total net benefit of both alternatives before coming to a decision, he is using the technique of ________. A) marginal analysis B) mean analysis C) optimization using total value D) optimization using marginal analysis

Optimization

Making choices by selecting the best feasible option, given the available information, is referred to as ________.

D

Gary has to decide between attending a 2-day art workshop and a 4-day art workshop. If he evaluates only the change in net benefit when he switches between the two options, he is using the technique of ________. A) mean analysis B) before and after comparisons C) optimization using total value D) optimization using marginal analysis

D

Which of the following is NOT a step involved in optimization using total value? A) Calculating the total net benefit of each alternative B) Choosing the alternative with the highest net benefit C) Converting all costs and benefits into a common value of measurement D) Calculating the marginal consequences of moving between alternatives

B

Which of the following statements identifies a difference between optimization using total value and optimization using marginal analysis? A) In most cases, optimization using total value is faster and easier than optimization using marginal analysis. B) In many cases, optimization using marginal analysis is faster and easier than optimization using total value. C) Optimization using marginal analysis compares only the cost involved in different alternatives, whereas optimization using total value compares the net benefit of different alternatives. D) Optimization using marginal analysis compares the net benefit of different alternatives, whereas optimization using total value compares only the cost involved in different alternatives.

C

Which of the following statements identifies a difference between optimization using total value and optimization using marginal analysis? A) Optimization using total value compares only the costs of different alternatives, whereas optimization using marginal analysis compares only the benefits of different alternatives. B) Optimization using total value compares only the benefits from different alternatives, whereas optimization using marginal analysis compares only the costs of different alternatives. C) Optimization using total value calculates the net benefits of different alternatives, whereas optimization using marginal analysis calculates the change in net benefits when switching from one alternative to another. D) Optimization using total value calculates the change in net benefits when switching from one alternative to another, whereas optimization using marginal analysis calculates the net benefits of different alternatives.

D

Which of the following statements identifies a similarity between optimization using total value and optimization using marginal analysis? A) Both techniques consider only the costs of different alternatives. B) Both techniques consider only the total benefits of different alternatives. C) Both techniques evaluate the total net benefit of different alternatives to arrive at a decision. D) Both techniques require the conversion of all costs and benefits into a common unit of measurement.

B

Which of the following statements is true? A) It is easier for a person to optimize when he has less information. B) Optimization implies choosing the best option from a set of alternatives. C) People always successfully optimize given the limited information they have. D) Optimization is an easy process, and all economic agents are perfect optimizers.

C

Both optimization using total value and optimization using marginal analysis ________. A) consider only the benefits from different alternatives B) consider only the costs incurred in different alternatives C) provide identical answers when comparing two alternatives D) require the calculation of the change in net benefits when switching from one alternative to another

B

Optimization can be achieved using either of two techniques of cost-benefit analysis. Which of the following correctly identifies the techniques? A) Optimization using total value and optimization using profits B) Optimization using total value and optimization using marginal analysis C) Optimization in revenues and optimization using costs D) Optimization using marginal analysis and optimization using costs

D

Optimization using marginal analysis analyzes ________. A) the total net benefits of different alternatives B) only the costs of an alternative and not the benefits C) the total net benefits of the alternative that looks the most attractive D) the change in the net benefits resulting from a shift from one alternative to another

A

Optimization using total value calculates ________. A) the total net benefits of different alternatives B) only the benefits of an alternative and not the costs C) only the costs of an alternative and not the benefits D) the change in net benefits resulting from a shift from one alternative to another

C

The techniques of optimization using total value and optimization using marginal analysis ________. A) cannot be used to compare the same set of alternatives B) compare only the costs and ignore the benefits of the alternatives C) provide identical answers when comparing the same set of alternatives D) may provide different answers when comparing the same set of alternatives

D

To calculate the ________ of an alternative, an individual needs to estimate ________ of the alternative. A) marginal benefit; the total cost B) marginal cost; the total benefit C) opportunity cost; the total benefit D) net benefit; both the cost and the benefit

C

Which of the following statements is true? A) Marginal analysis is a key component in the process of optimization using total value. B) Only direct costs are considered when the net benefits of the alternatives are calculated. C) In both the techniques of optimization, all costs have to be converted to the same unit of measurement. D) Optimization using total value calculates the change in net benefits when a person switches from one alternative to another.